You
can skip this column – and the whole messy business of long term care
insurance - if you’re relatively poor, making, say, $30,000 a year or
less. That’s because, if you ever need to be in a nursing home, the
government, i.e. Medicaid, will pick up the cost you can’t cover. So
why worry?Have a nice
walk.

You
can also skip this column if you’re rich. That’s because you’re
probably better off “self-insuring,” that is, paying for long term
care yourself if you ever need it, than shelling out hundreds, or more
likely, thousands, of dollars a year from now until forever for a
service you may not ever use.

The
same even goes for some people in the middle – those whose lifestyles
would be seriously impaired by giving up hard-earned money for this kind
of insurance.

As
for everybody else? Grab a cup of tea and a pencil and read on,
especially if you’re widowed or contemplating a second marriage and
have a strong interest in protecting your assets. And when you’re
done, if you want to know more about this ridiculously convoluted but
important subject, get a copy of Ben Lipson’s extremely readable new
book. Already in its second printing by John Wiley & Sons, it’s
called “Choosing the Right Long-term Care Insurance,” one of the J.K.
Lasser guides to financial decision making.

In
the spirit of full disclosure, Lipson has for decades been a freelance
columnist for the Boston Globe and sells insurance himself. He’s
refreshingly clear: “In my humble opinion, long term care insurance is
a very simple product that by design the insurance industry has made
complicated so that people can’t compare apples with apples.”

“Ben
Lipson is one of my folk heroes,” says Al Norman, something of a folk
hero himself, an expert in long term care issues and executive director
of Mass Home Care, a nonprofit advocacy group for elders. The long term
care issue, says Norman, is best captured by the old joke: The first guy
says, “Ninety-nine percent of agents out there don’t know what
they’re selling.” The second guy, an agent, responds, “That’s
only fair because 99 percent of consumers don’t know what they’re
buying.”

So,
as they say about academics, we’re here to clarify things.

The
most important thing to know about long term care insurance is that
it’s a product geared to make money for the insurance industry. That
means agents make money by convincing you to buy. And that, says Eric
Carlson, a lawyer at the National Senior Citizens’ Law Center in Los
Angeles, means agents “have an incentive to make the risk” of
needing long term care in a nursing home sound “incredibly severe,”
even if it’s not.

Traditionally,
long term care policies were focused on nursing home coverage only.
Increasingly, many policies include coverage for care in your own home,
in a hospice, in assisted living facilities and in adult day care
settings as well as in nursing homes.

Al
Norman puts it this way: “What is your real risk of being in a nursing
home? If people understood their risk, they probably wouldn’t be as
nervous.” The average length of stay in a nursing home is 321 days,
according to 1997 national figures, the latest available. People
generally don’t need care longer than that because they either get
better or they die. In fact, the chance that a man 65 or over would need
to stay in a nursing home for five years or more is only 4 percent; for
women, it’s 13 percent. “Most people will spend a year or less in a
nursing home,” Norman says, “so don’t overbuy.” And beware of
policies with a 1-year deductible because your cost for care during the
first year may outweigh any savings.

Even
the insurance industry itself agrees with the basic idea that the poor
and the very rich don’t need long term care insurance. “If you’re
in a poor economic situation, this is not something you should spend
your money on,” says Joe Luchok, communications manager for the Health
Insurance Association of America, a trade group. “And if you are
really rich, you’re probably better off self-insuring.”

The
second most important thing to realize about long term care benefits is
that, although things are changing, most older policies cover nursing
home care and skilled home health services but do not provide much in
the way of non-skilled care in your own home.

The
same often goes for Medicare, the federal program for the disabled and
older people, which is limited in scope.For instance, Medicarewill
pay for nursing home care – but only for a very short time, and only
following a 3-day hospital stay. Medicare also only covers part-time
skilled home health care, and doesn’t pay for many of the other
services you may need, such as someone to get your groceries, mow your
lawn.

So,
in terms of buying long term care yourself, make sure you ask whether it
covers “integrated care” (nursing and non-skilled services) in all
settings, including help at home with “activities of daily living”
such as bathing, eating and dressing.

The
third most important thing to remember is that long term care insurance
is different from both health insurance and life insurance. With health
insurance, notes Lipson, “the insurer wants you to stay healthy. They
have a stake in that and, ideally, that was the concept of managed
care.”

With
life insurance, the insurer’s interest is in postponing your death.
“They want you to live a long time so they can invest your premium
dollars and put off paying your beneficiaries for as long as
possible,” says Lipson.

“With
long term care insurance,” he says, “the insurer wants you either to
die before you become disabled, or live a long life and keep on paying
your premiums. What they don’t want is for you to get sick and need
help – that’s the big problem with Alzheimer’s disease.”

Among
other things, Lipson says,“long-term
care insurers carefully screen their applicants, often silently
disqualifying them during the first phone inquiry. They try to court
younger and healthier participants and discourage older, sicker
patients.”

From
the buyer’s point of view, you can look at it this way, suggests
Stuart D. Zimring, an elder law attorney based in North Hollywood, CA.“You look at your family tree. If your parents both lived
to 105 and died while out picking apples because they fell out of a
tree, you probably don’t need long term care insurance.

“On
the other hand, if your parents stroked out at 60 and spent the next 25
years in persistent vegetative states in a nursing home or had early
onset dementia, you should probably think about it.”In his own case, Zimring, who is 56 and has a family history of
stroke and heart attacks, has opted to buy long term care insurance at
his relatively early stage of life so that his wife and children don’t
face the possibility of paying for expensive nursing home care.

Or,
think of it this way. If you’re 40 and healthy,long term care insurers will try to lure you with low
premiums, say $300 a year, but what you may not realize is that you’ll
be paying this premium for the rest of your life, even if you never need
long term care. Insurers may tell you that you won’t be singled out
for an increase in premiums, and that’s technically true, but they can
increase premiums for any class of policy holders at any time, and they
get to say who’s in that class.

On
the other hand, if you’re 65 and not so healthy, insurers will sock
you with premiums that can run thousands of dollars a year. And they
will reject you outright, Lipson cautions, if you have AIDS,
Alzheimer’s disease, cirrhosis of the liver, mental retardation,
Parkinson’s disease or any of a number of conditions for which you
actually would use long term care.

In
fact, by the time you really need long term care insurance, you probably
won’t be able to get it. Even just taking certain medications such as
Adriamycin (a cancer drug), Betaseron (for multiple sclerosis), Imuran
(for arthritis and other inflammatory conditions) may be enough to
disqualify you.

Across
the country, many people are trying to provide better consumer
protection in long term care insurance, a challenging task given the
huge growth of the industry in recent years. In Massachusetts, for
instance, State Senator Cheryl Jacques (D-Needham) is urging legislation
to provide adequate protections for consumers, including minimum
standards for such policies.

The
real point, Lipson stresses, is “to live out your life independently
and with dignity. Never buy a policy out of fear driven by emotional
blackmail. Just do your homework and learn the true facts.”

Judy
Foreman is Lecturer on Medicine at Harvard Medical School and an
affiliated scholar at the Women’s Studies Research Center at Brandeis
University. Her column appears every other week. Past columns are
available on www.myhealthsense.com.

SIDEBAR

TIPS
ON BUYING LONG TERM CARE INSURANCE

§Don’t
buy long term care insurance from a relative – your relative’s
financial interests may not be the same as yours.

§If
you’re concerned about protecting your assets, see a financial planner
and if necessary, an elder law attorney as the first step. You may not
need long term care insurance at all.

§Don’t
replace a policy purchased before Dec. 31, 1996. (Older policies often
have better benefits than newer ones.) You can keep your old policy and
supplement it with a new one.

§Watch
out for policies that only cover care in a nursing home. This may
provide an incentive for your kids to put you in a home.

§Watch
out for group policies. Unlike many other states, in Massachusetts,
group policies (unlike individual policies) do not have to meet any
state standards, which means these policies are essentially unregulated.

§Consider
having premiums automatically deducted from a bank account. Otherwise,
if you become ill or forget to make a payment, your policy may lapse.

§Never
pay an insurance agent in cash. Write a check for the premium to the
insurance company whose application you sign, not to the agent.

§Keep
a record of the agent’s name, phone number and address, and tell
someone where it is.

§Ask
about inflation protection. If you buy a policy today that guarantees
payment of $100 a day in nursing home costs, that same care may cost
$250 a day in 20 years and you may get stuck with the difference.

§Ask
about “rate stabilization.” Many states do not limit insurers’
ability to raise premiums. At the very least, ask your potential insurer
for five years’ worth of history of premium increases.

For
more information, read Ben Lipson’s book, “Choosing the Right
Long-term Care Insurance.” All royalties from book sales go to a fund
Lipson has created in memory of his daughter, the Marjorie E. Lipson
Memorial Fund for Patients’ Rights and Patient Advocacy within the
John D. Stoeckle Center for Primary Care at the Massachusetts General
Hospital.